What should I do about my credit card charges before filing for bankruptcy?

Question

I think I'll file for bankruptcy within the next 6 months. I'm meeting with an attorney within the next few weeks. I've used my credit cards recently, and I'm afraid that the trustees will consider those charges fraudulent. What can I do to avoid that? Should I keep making the minimum monthly payments for a while? Thank you!

Lawrence C. Arany · Answer

The best thing you can do is discuss this issue with your bankruptcy   attorney.  The facts in your situation will dictate his/her advice.   Often its  wise to make the minimum payments.  On the other hand, if you can  point to a  significant financial event that caused you to realize that a BK had  to be  filed, then in that case, provided there are no other charges made   following that event, you would be able to withstand a discharge-ability   complaint.  You must certainly stop using the card!

Marlin Branstetter · Answer

If the charges were made when you knew or should have known you lacked the ability to pay the charges the creditor could consider the filing to be an abuse of bankruptcy law. Any charges made after you spoke with an attorney regarding bankruptcy would fall within those guidelines.

Peter Lively · Answer

The trustee isn't the party you need to be concerned about, it is the creditor(s) and perhaps the judge.  Certain transactions within a few months of the bankruptcy petition filing date are presumed to be fraudulent (lack of intent to repay).  Pre-bankruptcy planning should be done with the attorney who will handle your case taking into account all of your assets, exemptions, and debts.  Be aware that pre-bankruptcy payments within 90 days of the petition date aggregating $600 or more to one creditor are preferential and can be recovered by the trustee if the majority of your debt is consumer debt.

Richard Gonzales · Answer

By all means, ask your attorney this same question or questions. If my clients are feeling nervous, I usually recommend that they make a couple of minimum payments. This will normally buy them some peace. As a practical matter, unless the charges are large, or for luxury items, my clients don't have any thing to worry about. But again, speak to your counsel about this issue.

Ronald Nims · Answer

Taking cash advances or buying luxury goods shortly before filing bankruptcy can result in non-dischargeable debts.  I'm sure your attorney will discuss this matter with you can advise you on how to handle it in your bankruptcy.  Making minimum payments on credit cards before filing bankruptcy might help your credit scores but won't affect the bankruptcy.

Dorothy Bunce · Answer

The best choice is to either wait out the 3 - 6 months after using the cards or listen to the advice of the attorney you consult.  Depending on the amount involved, this may not be a problem, or it could be a huge problem.  BTW, the trustee usually doesn't care how you have used your credit cards in the months before filing bankruptcy because it isn't his problem.  The creditor whose card you used may be very concerned about this and could sue you in bankruptcy court.

Alan Ramos · Answer

You should see your attorney before you start on a plan of action.  If you make minimum payments until you see the attorney, you most likely will have no problems.  However, it is important that everything that you do is part of an overall strategy.

Melissa Botting · Answer

These are questions for the attorney you have already planned to meet. You will make your process much more difficult to take advice piecemeal from multiple attorneys. In order to handle your situation in a consistent most effective and cost efficient strategy, you should not address some problems piecemeal.

Kenneth Parker · Answer

Credit card usage within 60-90 days can be deemed non-dischargeable. Make sure you discuss your concerns with your attorney.

Bruce Barnhart · Answer

First, stop using your credit cards.  See an attorney as soon as possible.    Bring your last six credit card statements with you.

Keith Wellman · Answer

I don't understand why you wouldn't meet with an attorney immediately and get an answer to this and similar questions.  Or, if that's the soonest the attorney can meet with a prospective new client it begs the question whether you would be getting timely responses and optimal attention to your case as it progresses.  But to best answer your question based on these facts, the intent at the time of the charges is really what matters.  If there is a good reason why you decided AFTER the charges that you would need to file Bankruptcy then Creditors would have a losing case.  The presumption of fraud disappears after 70 to 90 days after the charges, but actual fraud is always non-dischargeable, which is why intent is the bottom line.  There are additional considerations such as how much is involved, and as mentioned, why you decided you may need to file Bankruptcy, that would be helpful in getting a better understanding of how to handle these charges.

Marjorie Guymon · Answer

Yes, make the minimums.

Daniel Garner · Answer

There is a 90-day period prior to your bankruptcy filing in which credit card charges are presumed to be fraudulent. If you're filing within the next 6 months, just make sure that "presumption period" has passed.

Stuart Nachbar · Answer

Make the minimum for at least 3 months.

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What should I do about my credit card charges before filing for bankruptcy?

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